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Many once "low paid" positions now pay reasonable well in the area -- police officers, for instance, can easily make over $100K per year. Have both adults in the house working at those sorts of income levels, and a 600K house is entirely reasonable. Add the green belt encircling the city (the normal release valve of bidding up) and prices rise.

Housing is an interesting economic phenomena because people are often willing to pay whatever is possible to pay, so if you have 100 houses in an area and a single working adult in 100 households, prices will fit the ability of a single working adult. Now get rid of inequality and have the second adult working, and prices simply explode to fill the ability to pay of both adults. And so on. It's how we run to stand still.